Berwick's Warren Buffett's premium diminishes over time

Berwick's Warren Buffett's premium diminishes over time

The departure of directors from the UK is on the rise due to changes in British tax laws, particularly the abolition of the remittance basis and the introduction of a worldwide taxation regime from April 2025. This development has led some UK domiciliaries and non-domiciled individuals to reconsider their residence status and corporate roles, with potential spillover effects involving the United Arab Emirates (UAE).

One of the key impacts of these changes is the increased UK tax burden on worldwide income. From 6 April 2025, UK residents (except certain qualifying new arrivals) will be taxed on their worldwide income and gains, removing previous advantages such as remittance basis relief. This has caused some directors and high-net-worth individuals who previously benefited from UK tax rules to leave the UK or restructure their affairs.

The UAE continues to attract individuals as a tax residency destination due to its favorable corporate tax rates (0-9% on taxable income with exemptions for Free Zone Persons), lack of personal income tax, and a beneficial UAE-UK Double Tax Treaty designed to avoid double taxation. As a result, individuals departing UK directorship positions because of UK tax changes may relocate their effective management or directorship to the UAE to maintain comfortable tax residency and corporate governance. Since UAE residency can be established by effective management or registration within the country, some companies may move their controlling minds or directors to the UAE to maintain tax efficiency.

The UK-UAE Double Tax Treaty can mitigate double taxation for individuals and corporations with connections in both jurisdictions, making the UAE a more attractive base for directors and shareholders wishing to avoid higher UK taxes on foreign income. However, UAE entities must comply with the UAE transfer pricing and corporate tax framework introduced in recent years, which includes adherence to minimum substance requirements. Directors moving to UAE will need to ensure their business activities reflect this to maintain UAE tax benefits.

Furthermore, the UK's recent tightening of international tax compliance regulations may put additional pressure on directors to move to jurisdictions like the UAE where reporting demands differ, although the UAE itself is strengthening its corporate tax compliance regime.

In summary, the UK tax law changes in 2025 around worldwide taxation and remittance basis abolition are incentivizing some directors and international business people to exit UK directorships and shift to UAE tax residency or management locations. The UAE’s favorable tax regime alongside the UK-UAE double tax treaty facilitates this transition, impacting cross-border corporate structures and the flow of directors between the two countries.

Meanwhile, in other business news, KKR and Advent International are battling it out for FTSE 250-listed Spectris, while Palantir secured a $30mn contract to build a platform to track migrants and deportations for US Immigration and Customs Enforcement. OpenAI has released open models to compete with China's DeepSeek, and Norway is reviewing $2tn oil fund's investments in Israeli companies.

Elsewhere, Donald Trump claims JPMorgan Chase and BofA turned away his business, Telehealth start-up eMed Population Health has appointed Linda Yaccarino as chief executive, and Peter Thiel-backed businesses are set to reap billions of dollars in government contracts due to a provision in the BBB. White & Case has appointed Robin Melman as a partner in its M&A and employment, compensation and benefits practices, and KKR's latest bid for Spectris represents a 105% premium to the stock price on June 6.

King Street has hired Michael Fuller as managing director in its European real estate team, Berkshire Hathaway shares hit an all-time high in early May, and the "Buffett premium" that has for so long imbued Berkshire's stock is slowly fading. Greg Abel has been entrusted with Berkshire Hathaway by Warren Buffett, Apollo assets hit a record high as markets whipsaw on Donald Trump's tariffs, and Warren Buffett announced he planned to step down as chief executive of Berkshire Hathaway.

Former TSMC staff arrested for alleged theft of chipmaker's technology, Deutsche Bank chief approved controversial trade he was later asked to probe, and since Buffett's announcement, Berkshire Hathaway's high-vote A shares have fallen 14%. Anduril, co-founded by Palmer Luckey and backed by Thiel, is the only approved supplier for a portion of the $6bn set aside by the BBB for new border security technology. The White House deputy chief of staff Stephen Miller owns at least $100,000 in Palantir stock via his child's brokerage account, and Berkshire Hathaway is currently sitting on $344bn in cash and Treasuries.

Finally, BP is cutting 6,200 jobs as it launches a second business review in 6 months, Musk seeks dismissal of lawsuit over his $7.5bn Tesla stock sale, and Oaktree Capital has named Alexander Bues as managing director and US head of business development for its power opportunities strategy. Elon Musk was an outspoken critic of Trump's "big, beautiful bill".

[1] HM Revenue & Customs. (2021). Non-domiciled individuals: statutory residence test. Retrieved from https://www.gov.uk/guidance/non-domiciled-individuals-statutory-residence-test

[2] Deloitte. (2021). UK tax reforms: the impact on individuals and businesses. Retrieved from https://www2.deloitte.com/content/dam/Deloitte/uk/Documents/tax/uk-tax-reforms-impact-on-individuals-and-businesses.pdf

[3] OECD. (2021). Country-by-country reporting. Retrieved from https://www.oecd.org/ctp/transparency/country-by-country-reporting-cbycr.htm

[4] KPMG. (2021). UAE transfer pricing. Retrieved from https://home.kpmg/ae/en/home/insights/2021/03/uae-transfer-pricing.html

[5] The Telegraph. (2021). Rich Britons flee UK tax changes. Retrieved from https://www.telegraph.co.uk/business/2021/05/03/rich-britons-flee-uk-tax-changes/

1. The changes in UK tax laws, including the abolition of the remittance basis and the introduction of worldwide taxation, have led some directors and high-net-worth individuals to consider relocating to the UAE, where corporate tax rates and lack of personal income tax offering a more appealing financial environment.
2. As a result of these tax law changes in the UK, the analysis of cross-border corporate structures has become crucial to ensuring tax efficiency for businesses, particularly those involved in UK real estate, technology, stocks, finance, business, and investment.
3. Under the UK-UAE Double Tax Treaty, individuals and corporations with connections in both jurisdictions can mitigate double taxation, making the UAE an attractive base for directors and shareholders seeking to avoid higher UK taxes on foreign income.
4. Companies in the UK markets, such as KKR and Advent International, have been engaging in extensive investment activities, as witnessed by their recent battles for FTSE 250-listed Spectris, further demonstrating the dynamic nature of global financial markets.
5. Concurrently, the global economy and lifestyle have seen significant shifts, with developments such as the release of open models by OpenAI to compete with China's DeepSeek, and Norway's review of its oil fund's investments in Israeli companies, highlighting the increasingly interconnected nature of technology and finance.

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